India may escape 'relatively unscathed' from European Union's sanctions

Different kinds of sanctions are staggered for implementation until Jan 2026, giving further room for Indian refiners to take countermeasures, according to EU sanction documents and refining officials

India may emerge relatively unscathed from the latest round of sanctions by the European Union (EU) on Russian energy sales, top refining officials and traders told Business Standard.

 

Different kinds of sanctions are staggered for implementation until January 2026, giving further room for Indian refiners to take countermeasures, according to EU sanction documents and refining officials. There will be some adjustments to be made and additional costs incurred in navigating these sanctions, especially for private sector refiners — but it will be “business as usual” for state oil companies, said a senior trader of a state refiner. 

Traders from state oil companies, which accounted for nearly half of total Russian oil imports of 1.8 million barrels per day (bpd) in calendar 2025 and meet most of the country's local fuel demand, will start talks in the next few days with Russian traders for supplies of Russian crude oil in September. 

Two officials told Business Standard that Russian counterparties are unconcerned and supplies will flow as usual. But there might be pressure on freight rates and discounts, they warned. Also, while overall Russian oil supplies will be strong, some of the flows may be rerouted among refiners: Russian Rosneft-owned Nayara Energy may absorb more Russian oil while Reliance may buy less of the Russian benchmark Urals grade. State refiners may get to secure more volumes of discounted Russian crude, the officials said. 

“Given the transition time available, multiple options on crude sourcing, and product disposal for India, the impact on the country will likely be limited,” said Pankaj Srivastava, senior vice president, commodity markets, at researcher Rystad Energy in

a note today. 

EU’s new sanctions 

There are three key elements to the EU’s 18th package of economic and individual restrictive measures, which will be applied on different dates. The EU placed Rosneft’s 400,000 bpd Nayara refinery in Gujarat under sanctions from July 18, which was announced under a separate regulation (EU) No 269/2014.

 

Under regulation (EU) No 833/2014, the EU endorsed lowering the price cap on exports of Russian crude oil from $60 to $47.60 per barrel on a free on board basis (FOB) — meaning Russian oil suppliers will lose access to European and UK shipping services and insurers unless they sell below the $47/ barrel (bbl) cap. This applies from September 3. A third key sanction bars EU imports of fuels made from Russian oil, something relevant to Reliance Industries, India’s biggest exporter of fuels to the world and to Europe. This will come into force on January 21. 

At the moment, Nayara Energy is the only impacted entity in India from EU sanctions. It is losing access to tankers operated by European entities because of the sanctions impacting its exports, ship-tracking data shows. The company accounted for around 127,000 bpd of exports this year, around 10 per cent of India’s exports, according to data from maritime intelligence agency Kpler. 

“This unilateral move by the European Union is founded on baseless assertions, representing an undue extension of authority that ignores both international law and the sovereignty of India,” Nayara said in a statement, declining to answer specific queries. It accounts for 8 per cent of the country’s total refining capacity and 7 per cent of India’s retail petrol pump network.  Nayara may face issues getting dollar payments for exports, an Indian trader said. The refiner must arrange tankers from the so-called unregulated “dark fleet” to export its crude and ask its buyers in Africa and West Asia to pay in dirhams, the trader said. Indian refiners typically use dirhams to pay for Russian oil.Nayara can also use third parties like Dubai to export fuels, the trader said. 

 

“UAE will theoretically qualify to export products to the EU, being a net exporter of crude,” said Vandana Hari, a Singapore-based energy expert. Crude oil imports may be less of an issue. Nayara's Russian oil purchases account for 69 per cent of the crude processed in FY25. The rest come from West Asia and other areas, which may hesitate to supply Nayara because of the sanctions. Nayara can draw on more Russian oil from its parent Rosneft to substitute Gulf grades, and sell more products in the domestic market to reduce reliance on exports, an industry official said. 

Come September 

In September, when the price cap on Russian oil is lowered by $13/bbl to $47/bbl, suppliers of Russian oil may find themselves relying on the dark fleet as EU shippers stay out because of the new cap, sending shipping costs higher. Higher shipping rates may squeeze the $2/bbl discounts offered on Russian oil further, a trader said. Reliance, which accounts for nearly 90 per cent of fuel exports to Europe, has six months to prepare for EU laws barring imports of fuels made from Russian oil, industry officials said.